I was privy to a recent seminar from Italy-based independent consultant Linda Beath on the shakeup in the digital world and thought I would pass along to you a number of (substantiated) facts that she presented, and some of my opinion.

Internet Users

December 1995………… 16 million users………… 0.4%

December 2000………… 361 million……………….. 5.8%

September 2005……….. 957 million……………….. 15.7%

September 2010…………. 1,971 million…………….. 28.8%

December 2015………… 3,366 million…………….. 50.1%

Where are they?:

Asia………………………… 48.4%

Nth & Sth America……… 21.8%

Europe…………………….. 19%

Africa………………………. 9.8%

Oceania…………………… 0.9%

Obviously there is dramatic growth in Internet usage, with Asia far outstripping every other region.

Cinema Attendance

Globally, the drop between 2010 and 2011 was in attendance. Nth American ticket sales sagged 4.7%.

2012 and 2013 attendance was stable

2014 attendance was down 5% from 2013

2015 is up 5.2% from 2014

Movie box office has stabilized—it’s not going down. There are fluctuations but they are not substantial.

In the UK, digital video (transactional VOD), such as iTunes, earned 1.3 billion pounds in 2016.

DVD and blu ray disc sales fell 17% to 894 million pounds.

Rental fell 21% to just 49 million pounds.

This merely confirms what everyone knows and that is that DVD revenue is falling away. The problem is that transaction VOD revenues are nowhere near the peaks of DVD—Digital video is not making up for the significant loss in DVD revenue. Piracy has a lot to do with this.

In Europe at least, sales agents can’t afford the time and expense to handle transactional VOD rights. Therefore, filmmakers will need to try and retain their transactional VOD rights and learn how to market and sell those rights themselves to get revenues in this area.

To 2021, transactional DVD is going to grow, but slowly. The real growth will come in the subscription VOD market, the likes of Netflix, Amazon Prime and Google Play.

SVOD is a global phenomenon.

In the fourth quarter of 2016, Netflix had nearly 90 million subscribers. In the US, they are in 40% of all broadband households. Their content spend in 2017 will be US$6 billon.

But there is competition for Netflix. Amazon spent $3.2 billon on video content last year. Their spend this year is expected to double or triple.

The trades recently reported the latest numbers out of the 2017 Sundance Film Festival, providing a good indicator of these companies’ purchasing power, with Netflix number one buyer at a total of US$36.5 million, while Amazon was number two at US$23 million.

If Netflix follows the business model it has used in other parts of the world, we can expect to see Netflix original programming in Australasia in the not too distant future. Undoubtedly, Amazon won’t be too far behind.

It’s interesting to ponder that NZ On Air’s entire budget for national TV screen content in the 2016 year was NZ$81. 5 million (US$59 million)—1.36% of Netflix’s 2017 budget.

Netflix is spending US$66.67 for every subscriber in a growing global SVOD market. NZ On Air is spending US$13.11 in a shrinking domestic free-to-air market.

One other piece of information Linda reported was that the BBC is going head-to-head with Netflix with its iPlayer, abandoning linear exclusivity.

Years ago, British broadcasters were banned from pooling their resources behind a common streaming platform, killing off Project Kangaroo. Perhaps there’s a bit of strategic thinking to be done by public service broadcasters globally on this.

A pity we don’t have one.

Tui Ruwhiu
Executive Director

Share this entry

https://www.degnz.co.nz/wp-content/uploads/2018/02/degnz_logo_home.png00Tuihttps://www.degnz.co.nz/wp-content/uploads/2018/02/degnz_logo_home.pngTui2017-02-03 10:00:382018-02-21 20:53:22Shakeup In the Digital World